Halts implementation to review claims of “unlawful destruction” by Native American group
The Department of Housing and Urban Development announced Wednesday that it was delaying the implementation of new rules regarding down payment assistance for loans backed by the Federal Housing Administration in response to a lawsuit filed by a Utah-based Native American group.
Last week, HUD issued what it called “informal guidance” to clarify documentation required for borrowers using funds from another person or entity to cover part of the FHA’s minimum down payment requirement of 3.5%.
But according to the Cedar Band of Paiutes, a federally recognized American Indian band that operates the Cedar Band Corp. and the CBC Mortgage Agency, the rules have far-reaching and damaging consequences, and effectively put its down payment assistance program out of business.
The group filed a lawsuit Monday claiming that the new guidance – which was set forth in Mortgagee Letter 19-06 – represents “a radical shift in longstanding HUD policy that effectively outlaws CBCMA’s business and pulls the rug out from under many borrowers, who now will be unable to close on their home purchase.”
The group further claimed that the mortgagee letter “unlawfully targets American Indian tribes and bands by prohibiting them from participating in home-purchasing assistance programs and thus threatens a critical source of revenue for the Cedar Band.”
The lawsuit sought an order to immediately halt the policy’s enforcement on the grounds that it was adopted without issuing proper notice and opportunity for comment, and that it stands in violation of federal law.
Now, HUD has backed off its guidance, issuing a 90-day stay to review the policy in light of the Cedar Band’s claims.
The group’s lead counsel, Helgi Walker of Gibson Dunn & Crutcher LLP, said the harm caused by HUD’s mortgage letter was staggering.
“We are pleased that the government understood the need to hit the pause button and return to the status quo for a period of time,” Walker said. “We remain confident that we will prevail in permanently rectifying this unlawful agency action.”
Author: Jessica Guerin – Editor at Housing Wire – April 25th, 2019 https://www.housingwire.com/articles/48882-hud-delays-new-rule-on-fha-down-payment-assistance-in-response-to-lawsuit
Jessica Guerin is an editor at HousingWire covering reverse mortgages and the housing wealth space. She is a graduate of Boston University and has a master’s degree from Northwestern’s Medill School of Journalism. She worked previously as the editor-in-chief of The Reverse Review magazine, which was recently acquired by HousingWire.
Governor: California’s housing crisis is a threat to our state’s future.
California Gov. Gavin Newsom announced recently that the state of California is suing Huntington Beach for “standing in the way of affordable housing production and refusing to meet regional housing needs,” causing “harm to Californian families’ ability to find affordable places to live.”
According to the Governor, California has attempted for quite some time to work with Huntington Beach to comply with the proposed state housing law, but even after several attempts to convince the city to create affordable establishments, the city has refused to build more affordable housing.
The law emphasizes that a city’s housing plan must accommodate a “fair share of the regional housing needs and provide zoning that encourages the development of housing that is affordable to the city’s residents across all income levels, including affordable housing and middle-income housing.”
The issue at hand is Huntington Beach has altered its housing plan to drastically reduce the number of affordable housing.
According to the Governor, the state has attempted to work with the city to ensure that there are more affordable housing projects getting approved, therefore bringing the city of Huntington Beach into compliance with state law. However, the city council recently voted to reject a proposal to build more affordable housing in the city.
As a result, Governor Newsom was forced to take action and sue the city of Huntington Beach.
“The state doesn’t take this action lightly,” Newsom acknoledged. “The huge housing costs and sky-high rents are eroding
The state’s lawsuit against Huntington Beach “seeks to ensure housing equity, requiring the city to amend its housing plan to bring it into compliance with state law by planning for the development of additional housing units that are accessible to residents of all income levels,” Newsom’s office said.
“Cities and counties are important partners in addressing this housing crisis, and many cities are making herculean efforts to meet this crisis head on,” Newsom said. “But some cities are refusing to do their part to address this crisis and willfully stand in violation of California law. Those cities will be held to account.”
Reference: Ben Lane (2019) California sues one of its own cities for not building enough affordable housing